Justice Department Misses The Point In Suit Against Realtors

from the not-getting-it dept

Here's a story that hits on some of today's themes of monopolistic behavior and keeping stuff off the internet. The Department of Justice has been given the go ahead to proceed with a lawsuit against the National Association of Realtors, alleging that the group colluded to prevent listings from appearing online, in a bid to give established brokers an advantage. Now, we'd be tempted to say that however backwards the organization's thinking is, they have the right to distribute their data to whomever they want. But we should take a step back and ask why the NAR is in the position to monopolize this information in the first place. That fault rests with the government, which has put the NAR in charge of regulating its industry, and deciding who can and can't be a broker. In other words, its monopoly has official legal blessing. Without this, anyone could go out and get listings, and abide by whatever rules they wanted to, offerings to broker home sales as efficiently as possible. So instead of suing the NAR, for doing what it's intended to do (maximize profits for its members) why not get at the root of the problem and take away its monopoly status?

Reader Comments

I agree with the idea that MLS listings should be made public, it's joke that in this day and age of information free flow, I have to have someone else do my searching for me.

I don't need a filter.

At the same time though, I don't agree with letting just anyone be a broker. Think about all the scam artists and con men out there, this would be like Christmas come early. Some form of oversight is necessary here.

Should selling my house cost me 6%, Hell no...is there efficiencies to be gained in real estate sales, definitely...opening up the MLS database is a good start

Monopolistic tendencies NAR

You may want to investigate both sides of the issues before you come to a conclusion.

If you'd like to see how open access to properties on the market is done in Texas, please visit this site: www.har.com. The public has easy access to all the properties on the market regardless of the lisiting Broker.

I wonder why there has not been a bigger "hue & cry" over the Justice Department's white glove treatment of the SBC merger with the baby bell in the southeast. It looks like the former behemoth "AT&T" is resurrecting itself. Look out, your internet and phone bills may be going up soon.

not quite...

"That fault rests with the government, which has put the NAR in charge of regulating its industry, and deciding who can and can't be a broker."

Joe: While that may be a common perception, that actually couldn't be further from the truth. I used to have my real estate license in the state of Maryland and definitely wasn't a "realtor". My father's been a broker for some time and never once belonged to any local, state or national group of realtors. Admittedly, he works on the commercial side of things, but every now and then dabbles in residential. The only thing his refusal to pay up to the local realtor racket has cost him is access to MLS data. This data, and their piddly trademark, is pretty much all these associations bring to the table (that, and exhaustive, half-hour long 'ethics' training at their conferences, of course).

Like you said, they can do what they want with their data. The states are actually the licensing bodies, and have by no means created monopoly conditions. In fact, check out some of the cut-rate brokers dropping their commissions and at least trying to innovate a bit with a la carte pricing models -- and the industry groups' backlash against these new business models.

I appreciate the DoJ's attention to the matter. But if you look a little deeper, it's pretty obvious it won't be too long before the market corrects (read: bitchslaps) this backward, protectionist practice. So I'm with you -- what they do with their data is their own damn business. What I do with my dollar is mine -- and it won't be going to any Realtor(R) any time soon!

Self-regulation

Self-regulation = oxymoron. People are inherently greedy the same goes for a corporate entity. Look at the pharmaceutical industry...They're completely self-regulated (except for the health aspect). I mean they can do pretty much whatever they deem necessary to get a doc to write a script for their product. Doesn't surprise me that an association of Realtors would do anything different.

Similar Concerns in Canada

The same issue is heating up here in Canada, too, though we are ages behind the US. The issue is access to the MLS system, and concerns that access rules are anti-competitive. Details at the Globe and Mail today, link at my site.

Monopolostic behavior by realtors

I think this is a pretty complicated issue and there seems to be a lot of mud flying abound and no one is really sure who the culprit is or what should be the final outcome. For example, is it the traditional brokers, the agents, the NAR or the MLSs who are at fault? What specifically is the problem? There must be some barriers to free trade as new models seem to often rejected by the Industry. I think there are structural problems here, not just the specifics of the rules and regulations which will probably have just a minor effect. If the DOJ took down the barriers in the form of the MLS and gave the rights back to individual brokers to see if they wanted to share information or not, that seems like a sensible solution.

I also agree with some of Joe's comments articles in the article. It seems some fault does rest with the government, and it seems crazy that a trade organization has managed to in effect control the primary distribution channel for the industry - the MLS. No wonder many consumers dont think they are getting a good deal, they have no choice and the NAR is frankly doing a good job as you say of protecting it's members interests. It is crazy that the MLS (which is a natural monopoly) is effectively run by the NAR, as a monopoly it should be government regulated or disbanded.

Almost correct

NAR does not decide who can or cannot be real estate agents or brokers. The state licensing boards or commission of each state is the entity that determines that. However, once licensed as an agent or broker; then one is eligible to join NAR and their local association of Realtors. Realtor is a trademarked named of NAR, a word popularized to decribe its licensed real estate agent 'members.' Thus, if one is licensed agent in his or her state- they are just a real estate agent, or broker- not a Realtor unless they join NAR.

NAR however is a cooperative member organization, best stated of Realtor brokers who have agreed to provide their listings to NAR's information exchange system, MLS. And only 'member' Realtor brokers, who are also required by NAR to sign up the agents they sponsor (state law- agents must have a sponsoring broker)who become almost by force, a Realtor agent. If a Realtor broker is found to have not signed up agents wtih NAR's MLS then they are fined and billed the agent's membership. Thus once licensed, one is still not free to be in professional and active working relationship if the broker they wish a professional career track is a member of NAR, and they are not. Forced to join to have the tools of the trade which sucks, big time.

Realtors, the NAR, and such

So many comments on the subject of Realtors, the NAR, commissions, and so on. So much is misunderstood! Fair minded folks will figure out what the truth is, those who spout off just to make noise won't consider another side of the argument anyway, but I'll give it a try.

Visit the web site of the NAR and you will find articles and links to thousands of pages that are designed to help the consumer. Tips on preparing their home for sale, tips to avoid bad mortgage deals and predatory lenders, education about the process of real estate and how to meet your real estate goals safely. The list is exhaustive and demonstrates that the NAR does exist for the right reasons. Now visit one of the alternative "no service" web sites - like Red Fin, for example. Pages upon pages of how cheap their service will cost, but hardly a word about the process and how to make it through safely.

You doubt the Realtor has any value? Joining isn't cheap, but they educate and strictly enforce ethicical practice. You can lose your life savings if your real estate transaction is mishandled - it's only smart to have professional guidance through it all. Plus the fact that negotiating is more than making demands and winning on your terms. Good negotiation is being able to stick to the goal without getting too emotional when you receive a ridiculous offer or are handed insulting demands - a middle person to absorb those hits can make the difference.

Now, get this - all commissions are negotiable. The average is just at 5%, which means for every 6% transaction, there must be at least one that is 4%. Yes, these are all full service averages. And for the record, I'll share any listing with anyone who will bring a buyer for my client - just like I would show a FSBO to my buyer client if it matches their wants - regardless of commission. Most Realtors I know will do the same.

Some of you guys and gals are way off base in your thinking, or else you're hanging out with the wrong crowd. Do yourself a favor and open up your mind just a crack - let some air in there.

about this

The above comment must be from a realtor who knows that his/her business is soon to go the way of the travel agent. Pretty soon we will all buy and sell our homes via the internet and never even speak to a real estate agent.
Oh, I love technology.
------------
Tom